From box-ticking to board strategy: capitalising on APRA and ASIC’s governance regulation wind-back
Key Takeaways
The Finance Sector’s regulatory landscape is undergoing a structural realignment, with proposed changes from APRA and ASIC shifting the focus from burdensome box-ticking and notifications, permitting a genuine uplift in governance.
- Financial Accountability Regime (FAR) trimmed: Accountability maps no longer apply to accountable persons’ direct reports, and regulatory requirements are simplified, halving the ongoing notification requirements.
- Five APRA Governance standards consolidated in CPS 510 and duplicative reporting ditched: One standard setting out minimum governance expectations, simplified definition of responsible persons (RPs) to align better with FAR and most RP notification requirement removed.
FAR proposals focus on reduced administrative burden while APRA’s proposals balance reduced burden with strengthened expectations of board capability to make appropriate strategic decisions in a future with significant risks and opportunities.
Why does this regulatory shift matter?
The joint updates from the regulators represent a macro contribution to the Government’s Better Regulation reforms. Regulators have openly acknowledged that corporate failures stem from poor oversight, weak challenge, and unclear accountability, not missing forms. For boards, this administrative wind-back goes some way to address complaints of compliance overload.
The removal of responsible persons notifications and enabling boards to delegate immaterial compliance matters to committees and management ensures that directors reinvest their time into navigating geopolitical, technological, and operational disruptions. This strategy aligns with the “proportionate” regulation themes we previously explored regarding triennial effectiveness reviews.
How is APRA proposing to strengthen governance?
Key proposals include regulations intended to:
- Ensure boards are composed of the right people with the right skills, without conflicts that cannot be managed, and that they do not stay too long.
- Ensure that there are enough independent directors to enable independent oversight and decision-making across multiple group boards.
- Enable smaller, less complex entities to have simpler board structures.
- Require robust independent board performance assessments to measure how effectively governance is operating in practice.
What the proposed changes mean for boards
When finalised, CPS 510 will require boards to assess the compliance of their current governance framework and update the elements that do not comply. This will include policies but may also extend to constitutions and charters. For example, reviews and approvals will need to be incorporated in the schedule of board work for 2027 as enforcement will commence start of 2028.
The clarification of delegation authority affords boards an opportunity to delegate immaterial board work to committees and potentially management. Boards will need to develop clear guidelines for delegation.
Some boards will need to appoint additional directors if they are below the minimum of five. Others may be able to reduce the board size as non-SFIs will be permitted to combine their audit and risk committees.
Boards should prepare any feedback on the proposed changes to CPS510 and submit them before the deadline at the end of August 2026.
Links to the original APRA publications:
- APRA commences next phase of push to strengthen and streamline governance requirements
- APRA and ASIC announce FAR changes to reduce administrative burden